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How Big Will Stablecoins Become?
Regulation has given the digital assets legitimacy, but experts aren’t sold.
- By
- October 30, 2025
- CBR - Finance
Bipartisanship is, generally speaking, in short supply in the US Congress. In July, however, lawmakers managed to briefly pause their cross-aisle squabbling for the sake of stablecoins. The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) was passed by the House of Representatives by a vote of 308 to 122 and signed into law.
The legislation sets out a generally reasonable-looking regulatory framework for stablecoins in the United States and could, potentially, lead to an increase in their use. But a poll of finance experts by Chicago Booth’s Kent A. Clark Center for Global Markets reveals some doubt about stablecoins’ prospects of making the financial system more efficient, or of entering the financial mainstream.
Stablecoins are a fairly recent innovation that sit at the much more, for want of a better term, ‘respectable’ end of a crypto spectrum that sometimes veers into outright scams. Unlike Bitcoin and other speculative cryptocurrencies, which see their value fluctuate, often wildly, stablecoins are usually pegged to a fiat currency and backed by real-world assets. A stablecoin pegged to the US dollar is, efficiently, a token issued by a stablecoin firm that, in theory at least, has enough deposits and safe government bonds on hand to redeem all of those tokens at par if holders were to demand it.
This is, in many ways, similar to an old-fashioned money market mutual fund. What differentiates stablecoins, according to their advocates, is the better technology embedded into the system. Because transactions involving stablecoins are recorded nearly instantaneously on central digital registers, they allow for low-cost money transfers without the long wait times often involved with traditional finance, especially when such transactions cross borders.
Despite strong growth in recent years, stablecoins essentially serve three main purposes. They are widely used as part of the wider cryptocurrency ecosystem to purchase other cryptocurrencies—although over the past 18 or so months, the growth of stablecoins does seem to have decoupled from the growth of cryptocurrency transactions. In states marked by low trust in the government and traditional banking, together with high inflation—such as Nigeria and Turkey—they have begun to carve out a role as a substitute for fiat currencies. And then there are cross-border transactions: Sending a remittance via a stablecoin can often cost just a third (or sometimes even less) as much as using a wire transfer.
The poll results suggest that the GENIUS Act may have been a big moment for digital currencies, but it’s not yet a breakthrough.
Despite the new US regulatory footing, not everyone is convinced that the growth of stablecoins is a useful development. European policymakers in particular fret that stablecoins could draw money away from the existing banking system, undermining both financial stability and, potentially, the power of central banks. The European Central Bank is instead working toward launching its own digital euro. Others worry that stablecoins might prove vulnerable to runs or that their use can mask criminal activities.
The Clark Center’s poll of its financial experts panel reflects the diversity of opinions about stablecoins. Asked whether “the markets for consumer and business payment services would be substantially more efficient if payments by stablecoins . . . became an accepted alternative to traditional payments,” many panelists were skeptical.
Weighted by confidence, 47 percent disagreed or strongly disagreed, 29 percent expressed uncertainty, and 24 percent either agreed or strongly agreed. Darrell Duffie of Stanford, who strongly agreed, argued that “if stablecoins become widely accepted (which is not all that likely), the added competition for banks would increase efficiency. Bank-railed payment services would improve and interchange fees for credit cards would decline significantly.” On the other hand, Jonathan A. Parker of MIT, who strongly disagreed, countered that “there are extremely well-developed payments rails using traditional ledgers and currencies. Stablecoins have no technological advantage, and blockchain based coins are less efficient. They have only a regulatory advantage. MMMFs [money market mutual funds] regulated like stablecoins would be more efficient.”
The panel was also asked to weigh in on the following statement: “Ten years from now, stablecoins will account for a substantial share of payment flows and deposits in the global banking system.” Given that answering this question involves a good sense of not only how the technology will develop but also how regulatory systems across the world will react and how consumer and business behavior will respond, the results were perhaps unsurprising: weighted by confidence, 75 percent of respondents were uncertain.
The poll results suggest that the GENIUS Act may have been a big moment for digital currencies, but it’s not yet a breakthrough. The US has taken a major step toward normalizing stablecoin usage; whether there is much follow-through remains to be seen.
Duncan Weldon is an economist, journalist, and author who regularly writes for the Financial Times, New Statesman, and other publications. This is an edited version of a column that ran on Booth’s Clark Center website.
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